good news for renters in sought-after suburbs

I cant believe that BIS are still in business, they have been consitently wrong on virtually everything over the past 5 years.

http://www.smh.com.au/national/good-news-for-renters-in-soughtafter-suburbs-20090410-a2wc.html?page=-1

THE tide has turned on Sydney's upper rental market, as properties lie vacant and landlords are forced to slice asking prices by as much as 20 per cent.

Job losses, over-stretched budgets and a flood of unsold investment properties contributed to significant falls in median new rents in some well-located suburbs in the inner-west and north over the final three months of last year, Housing NSW figures show.

While rents continue to rise across Sydney as a whole, the median weekly rent on a one-bedroom unit slumped 12.5 per cent in Balmain to $350 a week, 9.6 per cent in Stanmore to $260 and 9.1 per cent in Glebe to $300.

For two-bedroom dwellings, rents also fell by more than 5 per cent in Narrabeen (to $440 a week), Drummoyne ($450) and Petersham ($400).

Peter O'Malley, the principal at Harris Partners in the inner-west, said renters were being more discerning about what they would pay for high-end rentals. "Unlike 12 months ago, if a property was priced incorrect, it would lease anyway. We are finding with tenants now, that is not happening. The supply is such that tenants don't feel the need to go out and overpay for a rental property." Interest rate cuts had also reduced pressure on landlords to increase rents, Mr O'Malley said.

The managing director of SQM Research, Louis Christopher, said discounting of up to 20 per cent off original asking prices was not uncommon for rental properties of $900 a week or more. "The luxury end of the rental market is definitely more discretionary. With the fallout in the economy and particularly job losses in the finance sector in Sydney, and we're seeing quite a lot of job losses, that has meant the demand for those properties has slumped.

"Many landlords have been caught out not getting the rent they thought they would. No matter how tight the market is, the forces of supply and demand still exist in the rental market and if you put up prices too high, expect less interest."

Meanwhile, supply of new rental properties had increased, Mr Christopher said, and a lot of investors were trying to sell and failing. "What they're trying to do to get some cash flow out of it is putting them into the rental market."

Victoria Cavallo, an agent at Reach Property Management, on the upper North Shore, said many rental properties in St Ives and Hornsby were vacant. "When I go to re-lease them, I have to drop the price from what the previous tenant has been paying them."

A four-bedroom property on Kenthurst Road, St Ives, was advertised last July at $1350 a week and is now on the market for $1200.

A senior economist at Reality Economics, Liam O'Hara, said the steep rental increases of previous years would cease this year, as demand dropped across all sectors of the economy. "Instead of having 10 to 20 per cent increases in rents we are seeing more modest rises, maybe 2 to 3 per cent."

But opinions differ. A property analyst at BIS Shrapnel, Jason Anderson, predicted that overall rents would rise by another 10 per cent this year as the financial crisis reduced construction of rental housing.

INSIDE

Domain rentals includes houses, apartments and share accommodation across Sydney.